Instagram founders resign amid reports of tensions with Zuckerberg

26 September, 2018, 19:15 | Author: Kevin Carter
  • Instagram co-founders Kevin Systrom, Mike Krieger reportedly step down

The co-founders of Instagram Kevi Systrom and Mike Krieger have announced that they are leaving the company they sold to Facebook for $1bn six years ago.

Facebook doesn't disclose how much money Instagram pulls in, though Wedbush analyst Michael Pachter estimates it'll be around $6 billion this year, or just over 10 percent of Facebook's expected overall revenue of about $55.7 billion.

Instagram had about 30 million users in 2012, the year it was purchased by Facebook for what appeared to be an eye-watering $1bn.

Having the Instagram founders walk out the door - shortly after the WhatsApp founders grew frustrated and did the same - does not project the image of a Facebook on sure footing. "Kevin and Mike are extraordinary product leaders and Instagram reflects their combined creative talents", wrote Zuckerberg. Instagram largely operated as a standalone company within Facebook, and now some of that autonomy could disappear. And Adam Mosseri, formerly the VP of News Feed at Facebook, was made Instagram's new head of product.

"Instagram is one thousand percent better than what it started as because of the monetization skills brought by Facebook and the competition with Snapchat". It had no ads back then; it now features both display and video ads, although they're still restrained compared to Facebook.

Kevin Systrom and Mike Krieger
Instagram co-founders stepping down from Facebook

They also come at a time when Facebook's core platform is under fire for how it safeguards customer data, as it defends against political efforts to spread false information, and as younger users increasingly prefer alternative ways to stay in touch with family and friends. Every part of Facebook, including the main social network and WhatsApp, are now emphasising Stories, and Facebook is trying to push advertisers toward the still-novel format.

Mr Koum's departure sparked an executive reshuffle that saw the tightening of Mr Zuckerberg's control over operations.

More recently, though, it's been Facebook that needs Instagram more than the other way around, and that makes the departure of the Instagram founders a particularly painful sting.

With Systrom and Krieger gone, Williamson says it could be more challenging for Instagram to maintain that independence, especially if Zuckerberg installs his own executives to lead Instagram now. Meanwhile, Facebook is losing its grip on users' attention, with time spent on its primary service down 7% year on year this month. "We look for additional colour in coming days and weeks, but in the near term we expect FB shares to come under meaningful pressure from the departures".

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